BC Liberals

He can’t hide his lyin’ eyes

In March 2010, Finance Minister Colin Hansen issued a three-year service plan and Ministerial Accountability Statement. In it, he makes various assertions. One is a forecast that 2010 Public Accounts will be issued in compliance with Canadian Generally Accepted Accounting Principles (GAAP).

In separate target declarations, Hansen stated his Ministry’s intention of issuing public accounts for the years 2011, 2012 and 2013 that are in compliance with GAAP. Later in the report, the Finance Minister declares that issuance of financial statements in compliance with GAAP is,

“. . . an indication of the transparency of government in accounting for its finances.”

Hansen emphasizes,

“. . . the Ministry strives to provide an accurate and fair representation of the government’s financial position in accordance with Canadian generally accepted accounting principles (GAAP). To validate this position, government seeks an independent audit opinion that offers an objective assessment of its financial reporting.

Today, the Auditor General of British Columbia issued Report 2: Observations on Financial Reporting: Summary Financial Statements 2009/10.

  • The Auditor General denied an unqualified audit opinion on the Summary Financial Statements because the statements do not comply with generally accepted accounting principles (GAAP). All three of this year’s reservations were also included as reservations last year. First, oil and natural gas producer’s royalty credits are inappropriately being netted from revenue rather than being reported as expenses. Second, government is not recording liabilities for deep-well credits owed to oil and gas producers. The third reservation is the improper consolidation into the Summary Financial Statements of the Transportation Investment Corporation (TIC). Consolidating the accounts of the TIC using the modified equity method rather than the line-by-line method results in significant differences in the financial statement balances.
  • Accounting by rate-regulated entities such as the BC Hydro and Power Authority is a significant issue. If government had not been permitted by current accounting standards to defer certain expenses, the annual deficit would have been about $700 million higher this year.
  • The government’s response to changing accounting standards included an amendment to the Budget Transparency and Accountability Act that provided government with the flexibility to change how it defines generally accepted accounting principles.
  • Government has improved its management of working capital by reducing its cash and temporary investment balances from about $7 billion as at March 31, 2009 to $3 billion as at March 31, 2010, but it can still do better.

We see that Mr. Hansen promises in March to comply with GAAP but, barely three months later, he issued financial statements for the province that are not in compliance. The differences are material, inexcusable and not new. The government was not in compliance in 2009 with GAAP and had no intention of being in compliance in 2010. So what led Hansen to issue the three year service plan in March that promised compliance? Government did not change its position between March and July. They have been refusing the Auditor General’s demands on these same issues over a number of fiscal years.

As Mr. Hansen has demonstrated before, he feels no obligation to speak honestly to BC citizens. He will say whatever is convenient to him at the moment. Of course, no one is surprised by that statement. It is old news. But, let us examine why the Government refuses to comply with the standards expected of them by the Auditor General.

The inaccurate accounting treatment of payments to the oil and gas industry is done to hide the amounts taxpayers are gifting this highly profitable industry run by billionaire corporate welfare bums. Additionally, these guys are also rewarded by the imposition of HST. That measure returns hundreds of millions of dollars to the petroleum industry that was formerly paid as provincial sales tax. Did the industry pass along cost savings in the form of lower prices? Of course not. They enjoyed increased profits, yet paid income tax at reduced rates because both the federal and provincial governments have been steadily reducing tax rates on corporate earnings.
Similarly, the Liberal government does not want to report honestly costs of the massive highway projects adjacent to the Fraser River. The construction is worth billions but there is no transparency allowing outsiders to examine financial arrangements. Instead of twinning the existing structure, Liberals decided to build a 10-lane structure and demolish the existing five lane bridge, the one they spent millions upgrading a few years ago. 
Why? Reasons have never been explained through independent engineering reports. The suspicion remains that Liberals were simply pushing up the value of untendered design-build contracts awarded to friendly contractors, led by American construction giant Kiewit Construction. Conveniently, since it is private, Kiewit is not subject to stringent reporting requirements faced by public companies. That ensures much financial information is unavailable for review.
The existing Port Mann bridge opened in 1964 and well maintained steel bridges regularly deliver service lives in excess of 100 years. It underwent thorough seismic upgrades in 2003 including rehabilitation of the main span, approach spans and north approach soils. Both subduction and non-subduction earthquakes were considered and anticipated in designs. There was close collaboration among the geotechnical and structural design teams to ensure appropriate superstructure-substructure-soil interaction compatibility. 
Failure to properly account for BC Hydro and other rate-regulated enterprises reduces the deficit by $700 million. Purpose of that difference is obvious and purely political. The Auditor’s comments about cash management simply prove that BC Liberals are not the business experts they have claimed to be since assuming office in 2001.

Categories: BC Liberals

5 replies »

  1. Waddaya expect from a sociopath/psychopath? The TRUTH? HAH!!!

    Like King Gordo the THUG, Huggies Hansen would lie through his teeth about anything.

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  2. Good article. Yes, why do we need a new Port Mann? It'll last for years yet. (Payoff to a Campbell and Co. company for sure.) And why take it down when the new one is up. It could be used for other things, like toll free for those who don't mind sitting in traffic awhile. What a corrupt bunch running this province. They must go before any more damage is done and hopefully we can undo the damage that has already been done in some way.

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  3. Norm said: “It underwent thorough seismic upgrades in 2003 including rehabilitation of the main span, approach spans and north approach soils.”
    —————————–

    Norm, you might be right but are you absolutely sure about that? My query is based upon Buckland & Taylor's own statement on the PMB on their website:

    “n 1994, Buckland & Taylor Ltd., in conjunction with Geomatrix Inc. of San Francisco and MacLeod Geotechnical of North Vancouver, performed a seismic evaluation and prepared recommendations for the bridge retrofit. This work included:

    *Liquefaction and ground movement assessment
    *Dynamic testing of the main span and south approach span
    *Dynamic analysis for multiple earthquake time histories
    *Push-over analysis for typical concrete bents
    *Preparation of retrofit recommendations

    In 2001, the Company completed the design and preparation of tender documents. Due to budget restraints, the construction of the retrofit has been put on hold by the Owner.”

    http://www.b-t.com/projects/portmann.htm
    ———–
    Was that ever completed?

    Buckland & Taylor further stated:
    ————————–
    “In 1998, 2002 and again in 2005, Buckland & Taylor Ltd. investigated fatigue mitigation options for the approach span girders.”
    ————————–
    Was that ever completed? Perhaps your information is better than mine, which is only based upon B & T's website.

    Norm, you might recall the major brouhaha about the PMB during the late 1960's when many of the piers began to sink as they were not properly “splayed” into/toward the bedrock.

    That pier sinkage is still evident today when one drives through the steel arches, in either direction, in terms of the road “dips” and the concurrent steel plating on the bridge deck.

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